Uncle Sam’s Tax Court just ruled that the one-rollover-per-year rule applies to all of a taxpayer’s IRAs rather than to each IRA separately. And that ruling, say experts, is in direct conflict with IRS Publication 590, the bible for IRAs.

“Industry leaders, financial advisers and everyone else who handles IRAs are stunned,” said Denise Appleby, the editor and publisher of The IRA Authority.

Transfers are not reported to the IRS and not reported on a tax return; the IRA owner never touches the money. You can do an IRA transfer as often as you like, whenever you like, Appleby said.

With IRA rollovers, the IRA owner takes the money as a distribution and has 60-days to rollover (put back) the amount in another IRA. And this, you can do only once per 12-month period, said Appleby.

The Old Rule

According to Appleby, the IRS — through its publications and regulations — has said for at least 20 years that the rollover method applies on a “per-IRA” basis. In other words, if you had 10 IRAs, you could do 10 rollovers during the year.

Here’s the guidance found in Publication 590 , which everyone viewed as gospel:

“Generally, if you make a tax-free rollover of any part of a distribution from a traditional IRA, you cannot, within a one-year period, make a tax-free rollover of any later distribution from that same IRA. You also cannot make a tax-free rollover of any amount distributed, within the same one-year period, from the IRA into which you made the tax-free rollover.

“The one-year period begins on the date you receive the IRA distribution, not on the date you roll it over into an IRA.”

The IRS gave this example: You have two traditional IRAs, IRA-1 and IRA-2. You make a tax-free rollover of a distribution from IRA-1 into a new traditional IRA (IRA-3). You cannot, within 1 year of the distribution from IRA-1, make a tax-free rollover of any distribution from either IRA-1 or IRA-3 into another traditional IRA.

However, the rollover from IRA-1 into IRA-3 did not prevent you from making a tax-free rollover from IRA-2 into any other traditional IRA. This is because you have not, within the past year, rolled over, tax0free, any distribution from IRA-2 or made a tax-free rollover into IRA-2.

The New Rule

Enter Alvan and Elisa Bobrow, who had a few IRAs.

In 2008, Alvan rolled over two distributions from his IRAs and took the position that the rollovers were valid because they were done in a timely manner, and involved different IRAs, Appleby wrote in her analysis of the court case. Alvan's position was that he had not broken any rules, as explained by the IRS in its publication for the past 20 years.

The IRS disagreed and determined that only one of the two rollovers was valid. So, Uncle Sam and the Bobrows went off to court. And the Tax Court — much to the surprise of IRA experts — agreed with the IRS.

The mistake cost the Bobrows an additional $51,298 in income tax and a penalty of $10,260. Maybe they should be thankful; it could have cost them $31,000 more, according to Appleby. You can read the gory details in Bobrow v. Comm’r, T.C. Memo. 2014-21.

So what was the bottom line? In essence, only one of the Bobrow’s distributions was eligible for rollover during the 12-month period.

In fact, the Tax Court concluded that the Internal Revenue Code Section 408(d)(3)(B) limitation applies to all of a taxpayer’s retirement accounts and that regardless of how many IRAs he or she maintains, a taxpayer may make only one nontaxable rollover contribution within each one-year period.

In other words, we’ve all been operating under the impression that what was written in Publication 590 — you know, the IRS’ very own publication — was correct. But it’s not.

In fact, the Bobrow case highlights, according to Appleby, an important rule that we sometimes overlook: “If conflicting information is provided in multiple sources, one must consider the hierarchy and reliability of such sources. In this case, Publication 590 is not authoritative and is not considered official guidance. The Tax Code is the more authoritative, and supersedes any other guidance in the event of conflict.”

So What Now?

Well, according to Appleby, the IRS will be changing its publications, changing what it has been saying for 20-plus years. The IRS will implement this change for everyone (well,everyone except the Bobrows who have to pay those penalties), starting Jan. 1, 2015.

You should plan ahead so that — starting in 2015 — you avoid making two or more IRA-to-IRA rollovers during a 12-month period. This 12-month (one-year) period is not determined on a calendar-year basis. Instead, it starts when the IRA owner receives the distribution, Appleby said.

And, check with your IRA custodian. According to Appleby, it will need to change customers' IRA agreements, because theysay what the IRS has been saying for years — which means they are wrong.

And finally, Appleby said, individuals should start moving money via transfers and not rollovers. “There are too many pitfalls with rollovers and none with transfers,” she said.

Robert Powell is a MarketWatch retirement columnist. He has been a journalist covering personal finance issues for more than 20 years. Follow him on Twitter @RJPIII.